The curse of populism

Opinion

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The scales have seldom been tipped so much in favour of any other prime minister. With the key institutions fully behind him; opponents already behind bars or struggling to keep handcuffs at bay; the media, by and large, praising him to the skies notwithstanding the pratfalls of his party men; and a credulous nation convinced that he is the much-awaited saviour, Imran Khan finds himself in a remarkably enviable position. All the same, the cricketer-turned-politician continues to play to the gallery, as he would do when he was on the other side of the political divide.

Several years ago, I was travelling by bus between Lahore and Islamabad. The driver played a Bollywood blockbuster, ‘Nayak’, in which the protagonist, a newly-elected chief minister, sets himself to turning things around in the state. He does so through unconventional yet popular means: taking on hardcore criminals in the streets, redressing public grievances and sacking corrupt officials on the spot, throwing out illegal tenants from the government land, and running at tax evaders – all by himself.

More notable than the plot of the movie was the reaction of the bus passengers, who went gaga over the ‘no-nonsense’ methods used by the hero to make his land a heaven on earth. An emotionally-charged young man, who was seated next to me, remarked that Pakistan also desperately needed a ‘nayak’ (hero) to nip every evil in the bud. That day, I realised that even though Pakistanis and Indians belong to separate nations, they have a collective psyche.

Real life is different from reel life. Here, the script is not written to entertain the public or perform a cathartic function. Hence, things don’t undergo a metamorphosis in a jiffy. Quick-fix solutions may catch the eye and win adulations. But because they don’t address the root causes, they turn out to be ineffective.

Crime, for example, can’t be controlled just by shaming and suspending negligent or incompetent police officials. Shahbaz Sharif, when he was Punjab chief minister, would visit the scenes of heinous crimes half the time and round on the officials concerned in public before giving them the sack. The media would make great play of his swift actions. But for all his sound and fury, there was no let-up in such vile incidents.

It has been three weeks since Imran Khan was sworn in as prime minister. This period is too short to assess his government’s performance. At the same time, it gives us a fair idea of the direction in which the ruling party will be moving during its tenure. Going by the actions and statements of the prime minister and his illustrious team, we may conjecture that the government’s policies will be rich in popular rhetoric, optics, and hot air, and, by implication, deficient in substance. When populism is in the driving seat, meaningful reforms take a backseat.

The management of the economy is the heaviest cross to bear for the new rulers. In Pakistan, governments come and go, but the structural economic constraints persist, which mainly manifest themselves in the form of substantial fiscal and current account deficits. The twin deficits force every government to resort to massive borrowing at home and abroad. The flip side of borrowing is debt-servicing. It is the need to borrow, the strings attached to the credit, and the obligation to retire the debt that largely define and constraint the macroeconomic policies of every government and, thus, its ability to deliver goods to the people.

The manner in which the PTI government has set out to curtail the twin deficits is cutting a dash with the people. To scale down the fiscal deficit, several measures have been announced, such as the sale of the PM Office’s luxury vehicles, drastic cuts in the PM’s personal staff, prohibition to serve meals during official meetings, and a ban on first-class business travel and medical treatment abroad at public expense.

Some of these austerity measures were already in place. But it never occurred to the previous governments to claim credit for those ‘revolutionary’ steps. Government officials, for instance, are required to travel by the national air carrier, which doesn’t offer first-class service. Likewise, a meal was seldom served to participants of meetings hosted by the government. At any rate, such austerity measures, if taken together, address only the tip of the iceberg, as they make up only a fraction of the total government spending. To illustrate this point, we may look at the federal budget for the current financial year.

Out of the total outlay of Rs5.93 trillion, Rs2.22 trillion have been allocated for debt-servicing, Rs1.1 trillion for defence, Rs463.37 billion for running the civil administration, Rs342 billion for pensions, and Rs477.92 billion for grants and transfers to provinces. These components of expenditure add up to Rs4.60 trillion, which accounts for nearly 78 percent of the total public spending. Likewise, Rs1.15 trillion – or 19.4 percent of the total expenditure – has been earmarked for development purposes. These allocations aren’t made on a one-off basis. Every year, these heads soak up more than 95 percent of the total federal government spending.

Subject to the approval of the National Assembly, the PTI government can reallocate the expenditure on different heads. But limited policy space is available to it. Would it default on domestic or foreign debt-servicing, cut back on defence spending, refuse to pay salaries or pensions to the employees, and make transfers and grants to provinces?

Likewise, the sale of vehicles will usher in one-time relatively modest revenue receipts. The only way the government can slash administrative expenditure is to lay off thousands of employees or shut down schools and hospitals, and turn its back on other social overhead capital. In view of the aura of populism that Imran Khan has built around him over the years, he will be walking a tight rope in case he chooses to do so.

A better option for the government will be to rack up tax revenue. Before gracing the PM Office, Imran Khan used to argue that corruption in high places discouraged people from paying taxes and that if people with integrity (read: Khan himself and his PTI team) were in the van, tax revenue would ratchet-up in no time. In the weeks to come, we are likely see several heads rolling in the Federal Board of Revenue (FBR) – its chairperson has already been shown the door.

Putting in place an up-and-running tax machinery is important. But if the economy doesn’t grow fast enough and the cultural propensity to evade taxes is not overcome – during his 2014 dharna Khan had asked people not to pay taxes – FBR restructuring (read: a reshuffle in the upper echelons) would be of little avail.

By the same token, bringing back ill-gotten money worth billions of dollars that is allegedly stashed in banks overseas, which undergirds the PTI government’s ‘strategy’ for economic revival, is easier said than done. It is likely that new government will also have to draw the begging bowl, which a man of honour like Imran Khan so strongly, and rightly, detests.

Playing with popular sentiments and promising the moon to the nation may be the optimal strategy when a political party is jockeying for power, but not when it is in the saddle. The container culture has exercised so powerful an impact on the PTI’s political moorings that even after forming the government it continues to sell pipedreams to the people. While such pirouetting may have helped the ruling party win the elections, it will undercut it ability to steer the ship of the state.

The scales have seldom been tipped so much in favour of any other prime minister. With the key institutions fully behind him; opponents already behind bars or struggling to keep handcuffs at bay; the media, by and large, praising him to the skies notwithstanding the pratfalls of his party men; and a credulous nation convinced that he is the much-awaited saviour, Imran Khan finds himself in a remarkably enviable position. All the same, the cricketer-turned-politician continues to play to the gallery, as he would do when he was on the other side of the political divide.

Several years ago, I was travelling by bus between Lahore and Islamabad. The driver played a Bollywood blockbuster, ‘Nayak’, in which the protagonist, a newly-elected chief minister, sets himself to turning things around in the state. He does so through unconventional yet popular means: taking on hardcore criminals in the streets, redressing public grievances and sacking corrupt officials on the spot, throwing out illegal tenants from the government land, and running at tax evaders – all by himself.

More notable than the plot of the movie was the reaction of the bus passengers, who went gaga over the ‘no-nonsense’ methods used by the hero to make his land a heaven on earth. An emotionally-charged young man, who was seated next to me, remarked that Pakistan also desperately needed a ‘nayak’ (hero) to nip every evil in the bud. That day, I realised that even though Pakistanis and Indians belong to separate nations, they have a collective psyche.

Real life is different from reel life. Here, the script is not written to entertain the public or perform a cathartic function. Hence, things don’t undergo a metamorphosis in a jiffy. Quick-fix solutions may catch the eye and win adulations. But because they don’t address the root causes, they turn out to be ineffective.

Crime, for example, can’t be controlled just by shaming and suspending negligent or incompetent police officials. Shahbaz Sharif, when he was Punjab chief minister, would visit the scenes of heinous crimes half the time and round on the officials concerned in public before giving them the sack. The media would make great play of his swift actions. But for all his sound and fury, there was no let-up in such vile incidents.

It has been three weeks since Imran Khan was sworn in as prime minister. This period is too short to assess his government’s performance. At the same time, it gives us a fair idea of the direction in which the ruling party will be moving during its tenure. Going by the actions and statements of the prime minister and his illustrious team, we may conjecture that the government’s policies will be rich in popular rhetoric, optics, and hot air, and, by implication, deficient in substance. When populism is in the driving seat, meaningful reforms take a backseat.

The management of the economy is the heaviest cross to bear for the new rulers. In Pakistan, governments come and go, but the structural economic constraints persist, which mainly manifest themselves in the form of substantial fiscal and current account deficits. The twin deficits force every government to resort to massive borrowing at home and abroad. The flip side of borrowing is debt-servicing. It is the need to borrow, the strings attached to the credit, and the obligation to retire the debt that largely define and constraint the macroeconomic policies of every government and, thus, its ability to deliver goods to the people.

The manner in which the PTI government has set out to curtail the twin deficits is cutting a dash with the people. To scale down the fiscal deficit, several measures have been announced, such as the sale of the PM Office’s luxury vehicles, drastic cuts in the PM’s personal staff, prohibition to serve meals during official meetings, and a ban on first-class business travel and medical treatment abroad at public expense.

Some of these austerity measures were already in place. But it never occurred to the previous governments to claim credit for those ‘revolutionary’ steps. Government officials, for instance, are required to travel by the national air carrier, which doesn’t offer first-class service. Likewise, a meal was seldom served to participants of meetings hosted by the government. At any rate, such austerity measures, if taken together, address only the tip of the iceberg, as they make up only a fraction of the total government spending. To illustrate this point, we may look at the federal budget for the current financial year.

Out of the total outlay of Rs5.93 trillion, Rs2.22 trillion have been allocated for debt-servicing, Rs1.1 trillion for defence, Rs463.37 billion for running the civil administration, Rs342 billion for pensions, and Rs477.92 billion for grants and transfers to provinces. These components of expenditure add up to Rs4.60 trillion, which accounts for nearly 78 percent of the total public spending. Likewise, Rs1.15 trillion – or 19.4 percent of the total expenditure – has been earmarked for development purposes. These allocations aren’t made on a one-off basis. Every year, these heads soak up more than 95 percent of the total federal government spending.

Subject to the approval of the National Assembly, the PTI government can reallocate the expenditure on different heads. But limited policy space is available to it. Would it default on domestic or foreign debt-servicing, cut back on defence spending, refuse to pay salaries or pensions to the employees, and make transfers and grants to provinces?

Likewise, the sale of vehicles will usher in one-time relatively modest revenue receipts. The only way the government can slash administrative expenditure is to lay off thousands of employees or shut down schools and hospitals, and turn its back on other social overhead capital. In view of the aura of populism that Imran Khan has built around him over the years, he will be walking a tight rope in case he chooses to do so.

A better option for the government will be to rack up tax revenue. Before gracing the PM Office, Imran Khan used to argue that corruption in high places discouraged people from paying taxes and that if people with integrity (read: Khan himself and his PTI team) were in the van, tax revenue would ratchet-up in no time. In the weeks to come, we are likely see several heads rolling in the Federal Board of Revenue (FBR) – its chairperson has already been shown the door.

Putting in place an up-and-running tax machinery is important. But if the economy doesn’t grow fast enough and the cultural propensity to evade taxes is not overcome – during his 2014 dharna Khan had asked people not to pay taxes – FBR restructuring (read: a reshuffle in the upper echelons) would be of little avail.

By the same token, bringing back ill-gotten money worth billions of dollars that is allegedly stashed in banks overseas, which undergirds the PTI government’s ‘strategy’ for economic revival, is easier said than done. It is likely that new government will also have to draw the begging bowl, which a man of honour like Imran Khan so strongly, and rightly, detests.

Playing with popular sentiments and promising the moon to the nation may be the optimal strategy when a political party is jockeying for power, but not when it is in the saddle. The container culture has exercised so powerful an impact on the PTI’s political moorings that even after forming the government it continues to sell pipedreams to the people. While such pirouetting may have helped the ruling party win the elections, it will undercut it ability to steer the ship of the state.